Ashok Leyland Surges 2.4%: Why It Matters

Ashok Leyland's shares have surged 2.4% to a new 52-week high of Rs 173.70, following a bullish outlook from global brokerage Nomura. The company is expected to benefit from the improving commercial vehicle cycle in India.

Why the Surge?

Nomura has assigned a target price of Rs 196, indicating an upside of 12.8% from Friday's closing price, and reaffirmed its 'Buy' rating on the stock. The brokerage describes Ashok Leyland as a "pure play proxy to India CV demand and a key beneficiary".

Growth Projections

Nomura expects a notable acceleration in growth, forecasting ~10%/10%/6% MHCV volume growth in FY26-28F, up from its previous estimates of 5%/6%/6%. The firm projects EBITDA margins at 13.4%/14.3%/14.5%, with an improvement of 10–20 basis points, translating into an 18% EPS CAGR over FY26–28F.

Key Factors

• Stronger export momentum and favourable industry tailwinds
• Benign commodity prices, lower discounts and operating leverage
• Rising freight rates, ageing fleets, and lower GST-led affordability

Nomura believes MHCV industry volumes are set to grow 8% to 10% y/y in FY26 and FY27, supported by these factors. Ashok Leyland remains the brokerage's "preferred pick in the sector".

Remember, this is perspective, not prediction. Do your own research before making any investment decisions.